example 3BA21 033130050 TMA1
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Course Code: BBM205/05
Title: Business Accounting II
Name: Rajarajan S/O R. Richardsamy
ID: 033130050
IC: 870117-10-5519
Tutor:
Class Code: 3BA21
Assignment: TMA 1
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Statement of comprehensive income for the year ended 30 April 2014.
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RM RMRevenue 813 000-Return inwards 47 000 766 000Cost of sales+Inventories at May 84 000+Purchases 516 000-Inventories at 30 April 74 000 526 000Gross Profit 240 000Other IncomesAllowances for receivables 23 000 263 000Other ExpensesAllowances for doubtful debts 23 000Depreciation on plant 8300Depreciation on office equipment
5 000
Discount allowed 4 000Administration costs 35 000Salaries 46 000Research cost to be written off 26 000Bad debts written off 77 000 224 300Net Profit 38 700
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Statement of Financial position as at 30 April 2014
RM RM RMAssetsNon-current assetsPlant at cost 83 000-Accumulated Depreciation 21 300 61 700Office Equipment 25 000-Accumulated Depreciation 5 000 20 000Total Non Current Assets 81 700Current AssetsReceivables 198 000Doubtful Debts 23 000 175 000Loan To Kah Wan 25 000Prepaid Insurance 3 000Inventories 74 000Total current assets 277 000Equity & Liabilities-Current LiabilitiesPayables 52 000Salaries Accured 2 000Bank Overdraft 50 000 104 000
254 700EquityCapital 230 000+Net profit 38 700-Drawings 14 000
254 700
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2. Paragraph 57 of MFRS 138: Intangible Assets mentions that expenditures that incur at development phase can be treated as intangible assets if they fulfill the certain following criteria.
Describe the criteria.
The practical viability of completing the intangible asset so that it will be available for use or
sale.
Its intention to complete the intangible asset and use or sell it.
Its ability to use or sell the intangible asset.
The ability to generate future economic benefits. Among other things, the entity can
demonstrate the existence of a market for the output of the intangible asset or the intangible
asset itself or, if it is to be used internally, the usefulness of the intangible asset.
The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.
Its ability to measure reliably the expenditure attributable to the intangible
asset during its development.
3. MFRS 6 Exploration for and Evaluation of Mineral Resources and MFRS 141 Agriculture ate two
standards that deal with natural resources .
(a) Define “natural resources “ as prescribed in the accounting standards.
Natural resources refer to standing timbers, underground oil and gas reserves, and minerals. They have
two main characteristics: They are physically extracted in operations such as extracting, exploring,
mining and cutting. They are replaceable only by act of nature. The cost elements for natural resources
consist of the price paid to acquire the resource and prepare for its intended use. It includes acquisition
costs, exploration costs, development costs and restoration costs. MFRS 6 Exploration for and Evaluation
of Mineral Resources and MFRS 141 Agriculture are two standards relevant to this section. However,
you need not understand the two standards in detail for this course.
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(b) Define “depletion” as prescribed in the accounting standards.
Depletion refers to the cost allocation of natural resources to expense in a systematic manner
over the resource’s useful life. The most commonly used depletion method is the units-of-production.
This method is widely used because depletion is a function of the units extracted during the year. You
may be wondering what the difference between depletion and depreciation is. Well, both of these terms
have the same underlying meaning. The only difference is that depreciation and accumulated
depreciation are used for man-made plant assets whereas depletion and accumulated depletion are for
natural resources. Many organizations prefer to use different titles to distinguish the amounts relating
to natural assets from the rest of the plant assets. Well, let us see if you understood the last point
concerning plant assets used in extracting natural resources.
4. MFRS 116 requires that all depreciable assets should be depreciated and that all plant assets, expect
for “freehold land” are subject to depreciation
(a) Identify the two commonly held assumptions concerning depreciation which are false.
In Malaysia, MFRS 116 requires that all depreciable assets should be depreciated. Based on
statement, the plant assets can be depreciated except for the ‘freehold land’, which are subjected to
depreciation. The freehold land is given exempted from the depreciation calculation. It is because the
property has unlimited useful life time and is the main reason it doesn’t fall under depreciation.
Moreover MFRS 116 paragraph 43 also needs every part of an item of fixed asset with a charge that is
significant in relative to the overall cost and the item have a different useful life or usage pattern, and
the depreciated is done separately.
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5. (a)
Balance b/b 200, 000 Vehichle disposed 20, 000Balance h/b 180, 000
200,000 200,000Balnce b/b 180,000
Vehicle Disposed 8750 Balance b/b 70,000Balance h/b 78750 Depreciation Vehicle 17,500
87500 87500Balance b/b 78750
Motor Vehicles disposed Motor Vehicle 20,000 Accumulated Depreciation 8750
Cash 8000Loss of disposed 3250
20,000 20,000
Motor Vehicle Account
Motor vehicles accumulated depreciation
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5.(b)
Balance b/b 60,0001-Oct-12 Bank 40,000 Balance h/b 100,000
100,000 100,000Balnce b/b 100,000
Balance b/b 20,000Balance h/b 23,150 Depreciation Vehicle 2,100
Depreciation Vehicle 105023,150 23,150
Balance b/b 23,150
Fixtures depreciation Accumulated Depreciation 20,000 Comprehensive Income 23, 150Depreciation Vehicle 3150
23, 150 23, 150
Fixtures Account
Fixtures accumulated depreciation
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5.(c)
Balance b/b 125,000Balance h/b 125,000
125,000 125,000Balnce b/b 125,000
Balance b/b 45,000Balance h/b 61,000 Depreciation Offi ce. E 16,000
61,000 61,000Balance b/b 61,000
Offi ce Equipment depreciation Accumulated Depreciation 45,000 Comprehensive Income 61,000Depreciation Offi ce. E 16,000
61,000 61,000
Offi ce Equipment
Offi ce Equipment accumulated depreciation
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Motor cycle (cost) account 1-Jan Bank 15,000 31/12 Balance h/b 24,5008-Jan Bank 9500
24,500 24,500
Motor cycle expenses31.07 Road Tax 100 31.12 balance h/b 100031.07 Insurance 400
1.08 Road Tax 1001.08 Insurance 400
1000 100031.12 Balance b/b 1000
Plant Equipment (cost) account 1-Jan Bank 24,000 31/12 Balance h/b 43,0001-Jan Bank 7,50031.12 Bank 11,500
43,000 43,0001.01 Balance b/b 43,000
Repair and Maintenance Account1.12 Bank 15,000 31.12 Balance h/b 20,000
31.12 Bank 5,00020,000 20,000
1.01 Balance b/b
Motor Cycle (Accumulated Depreciation )1-Jan Balance b/b 9,000
31/12 Balance h/b 11,990 Depreciation motor 1,50031/12 Depreciation motor 990
11,990 11,9901-Jan Balance b/b 11, 990
Plant & Equipment (Accumulated Depreciation )1-Jan Balance b/b 10,500
31/12 Balance h/b 14,300 31/12 Depreciation plant 3,800
14,300 14,3001-Jan Balance b/b 14,300
Plant & Equipment (Disposal )1-Jan Plant 5,600 1.04 Accumulated Depreciation 4760
1.04 Profit of disposed 1160 1.04 Cash 2,000
6,760 6760
Motor Cycle (Disposal )1-Jan Motor Vehicle 9,400 31/12 Accumulated Depreciation 601431.12 14 Cash 3400
9,414 9414
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